The Bank of Japan (BOJ) decided on Friday, July 31, 2026, to keep its benchmark policy rate unchanged at 1 percent.
The central bank cautioned that core inflation could accelerate beyond its 2 percent target later this year.
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The decision was reached through an 8-1 vote at the conclusion of a two-day policy meeting.
Board member Hajime Takata dissented, favoring a rate hike to 1.25 percent.
The BOJ noted that underlying core inflation is projected to pick up sharply from the second half of fiscal year 2026.
This projection is driven by higher crude oil prices, wage gains passed to consumer costs, and recent yen weakness.
Although July core inflation registered at 1.6 percent, the central bank reaffirmed its commitment to continuing rate hikes if economic and price trends align with forecasts.
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This approach aims to mitigate long-term inflationary risks.
The policy decision followed joint market actions by Japanese and U. S.
authorities on Thursday night.
A rate check pushed the Japanese currency from near 163 per dollar up to 157.96.
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Market analysts highlighted that central bank communications remain vital for predicting future monetary tightening and potential schedule changes for upcoming meetings.
